TRANSITION TO RETIREMENT

Not everyone’s path into retirement is the same. While some may be ready, willing and able to make a clean break into permanent retirement, others may want to pace their journey a little differently.

Transition to retirement

Some may not even want to think of it as ‘retirement’ but more a change in working hours or circumstances allowing a bit more flexibility to pursue other interests as well.

The good news is that there are options available to you through your super that can offer you some flexibility and support as you make the move into retirement.

A transition to retirement strategy lets you access your super while you’re still working

Once you reach your preservation age, super laws allow you to begin receiving an income from your super even while you’re still working. You do this through what’s known as a transition to retirement pension, sometimes also referred to as a pre-retirement pension.

Topping up salary or boosting super savings

A transition to retirement strategy may provide a way to help supplement your salary if you reduce your work hours or semi-retire, or boost your retirement savings while you continue to work full-time.

Some points to consider about a transition to retirement strategy

Accessing your super early may also mean you use up your super savings earlier. You may need to look at other sources of income later in life.

Contribution caps limit the amount that can be contributed to super without incurring additional tax.

Tax may apply to super benefits paid to you in cash before age 60.

There may be significant tax implications with this type of strategy – you should consider seeking professional financial advice and/or taxation advice before making any decisions affecting your financial future.

Transition to retirement and defined benefit divisions

Making use of a transition to retirement strategy may be available to you depending on your preservation age and the rules for your Defined Benefit division. These rules and your benefit entitlements can be complex so you should seek professional advice about any implications on your defined benefits before finalising any decisions. Find out more about the help and advice options available to you in the fund.

Louise (59) shares her member story about how transition to retirement helped her ease into full retirement...

“I’m happy with what I’ve done. Transition to retirement and reducing work hours were the right decisions for me, so I could scale back and start building up relationships outside of work. It wasn’t such a shock when I fully retired.

I was 58 when I retired but I started thinking about it at around 54. I wanted to maintain my lifestyle in retirement so I salary sacrificed in the lead up to retirement; I wish I had done it sooner.”

Other useful resources

How to access your super through a transition to retirement strategy

Moving from full time employment into retirement can be a big change, but it doesn’t need to be such a drastic move - there are options to help you ease into retirement. (Source: CommBank Blog)

Pre-retirement strategies

In this short video, you'll learn about different ways to help maximise your plans as you approach retirement. (Source: Commonwealth Bank Group Super)

Retiring in 10 years?

If you're now over 50, it's time to start thinking more seriously about what your retirement plans are, and what you need to do in the meantime. This article provides some valuable tips. (Source: CommBank)